Oil erased most of the morning’s losses in a volatile session that was buffeted by a wave of supply and demand data and a sharply stronger dollar. 

West Texas Intermediate briefly flirted with a rally into positive territory after dropping as much as 2.3 per cent following U.S. data that showed total crude inventories rose to their highest since the summer of 2021. The International Energy Agency boosted its forecast for global oil demand this year as China reopens its economy. A robust dollar was pressuring almost all commodities lower, capping bulls’ ability to break out. 

“The trajectory for demand is improving and for supply it is not,” said Josh Young, chief investment officer at Bison Interests. “China has been buying more physical oil in the last two weeks or so. Oil bears are taking it as a sign that China is gradually reopening.”

Traders appeared to have shrugged off builds reported by the Energy Information Administration as they were accompanied by the highest-ever adjustment figure. That number indicates the difference between reported stockpiles and those implied by production, refinery demand, imports and exports. A large fluctuation from week to week raises questions among some traders about the accuracy of the figures. 

Despite the daily gyrations, crude is still stuck in a US$10 band this year, caught between the risk of a recession hitting world governments and continued optimism surrounding Chinese demand. Smaller, macro-related fluctuations have moved prices up and down, but prices remain in the narrow band as the market remains fairly balanced until either a slow down or China’s reopening comes into full force. 

Prices:

• WTI for March delivery fell 33 cents to US$78.73 a barrel at 2:25 p.m. in New York.
• Brent for April settlement lost 12 cents to US$85.46 a barrel.